Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Cowen and Company 5th Annual Global Metals Mining and Materials Conference (November 2014)

33 slides from Freeport-mcmoran's conference presentation, Nov 11, 2014

  1. Slide 1: Kathleen L. Quirk, Executive Vice President & CFO

    Kathleen L. Quirk Executive Vice President & CFO www.fcx.com November 11, 2014

  2. Slide 2: Cautionary Statement Regarding Forward-Looking Statements

    Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relati

  3. Slide 3: FCX – A Premier U.S. Based Natural Resource Company

    FCX – A Premier U.S. Based Natural Resource Company  World’s Largest Publicly Traded Copper Producer  Long-lived Reserves with Large Incremental Resources  High-Quality U.S. Based Oil & Gas Assets  Strong Margins & Cash Flows  Growing Production Profile Through Brownfield Expansion  Experience

  4. Slide 4: FCX's Global Footprint

    FCX’s Global Footprint Major Operations & Development Projects North America1 Reserves Cu 36.2 bn lbs Mo 2.55 bn lbs Copper Oil & Gas 861 MMBOE2 Sales Copper/Gold/Silver Cu 1.67 bn lbs Molybdenum Mo 95 mm lbs3 Grasberg (90.64%) Oil & Gas 154 MBOE/d Cobalt Oil/Natural Gas Reserves Cu 30.0 bn lbs Au 2

  5. Slide 5: Geographic & Commodity Mix 2015e/2016e EBITDA

    Geographic & Commodity Mix 2015e/2016e EBITDA* North America Mining 50% 74% South America 15% Africa Indonesia Oil & Gas 7% 28% 26% * Based on 2015e/2016e average EBITDA of ~$13 bn assuming annual pricing of $3.25/lb Cu, $1,250/oz Au, $10/lb Mo, $100/Bbl Oil (Brent) and $4.50/MMbtu natural gas. Each

  6. Slide 6: Visible Organic Growth

    Visible Organic Growth Mining Oil & Gas  Targeting 5+ Billion Pounds  Growing Production Profile in Annual Cu Production by 2016 Established Basins (34% Increase from 2013)  Substantial Production Capacity  Advanced Stage Brownfield from Existing Deepwater Development Infrastructure to Benefit -

  7. Slide 7: Committed to Balance Sheet Management

    Committed to Balance Sheet Management Strong Track Record  Large Resource Base with Strong 9/30/2014 Balances Cash Flows and Capital Discipline ($ in bns)  2014 Completed/Announced Asset Sales − ~$5 bn in Gross Proceeds ($4.3 bn net $19.3 $18.7 of tax and adjustments) − ~$2.9 bn net of Reinvestmen

  8. Slide 8: Supply Side Challenges in Copper Persist

    Supply Side Challenges in Copper Persist Wood Mackenzie’s Current Outlook for Refined Production for 3-year Period of 2013 – 2015 is ~2 mm Tonnes Lower Than December 2012 Outlook (mm tonnes) 2013 2014e 2015e December 2012 Forecast 21.2 22.6 23.9 Current Forecast 20.8 22.0 23.0 Variance (0.4) (0.6) (

  9. Slide 9: Copper Markets – Long-term Fundamentals Support Positive Outlook

    Copper Markets – Long-term Fundamentals Support Positive Outlook Total Copper Consumption 40  Assuming 2.3% Global Growth +7.6 mm Over Next 10 Years, Copper 30 +5.4 mm 27% Cu in mm tonnes 24% Market Expected to Grow by +7.6 mm tonnes (27%) 20 Mature Markets 10 Emerging  Over Same Period, Productio

  10. Slide 10: World Class Copper Discoveries Are Extremely Rare

    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2014e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 35 0 200 400 600 800 1000 1200 1400 1981 Escondida - 1981 1981 Escondida - 1981 1880 Collahuasi - 1880 Chuquicamata - 1910 1988 Grasberg C

  11. Slide 11: Portfolio of World Scale Mines

    Portfolio of World Scale Mines Positive Exploration Results – “Big Mines Get Bigger” Mines with Potential Capacity for 1 billion lbs of copper per annum* Morenci Grasberg Tenke Cerro Verde Fungurume El Abra * Grasberg capable of producing over 1 bln lbs/annum, Morenci (100%) & Cerro Verde in develop

  12. Slide 12: Value Creation Focus

    Value Creation Focus INVESTMENT CASH MINERAL RESERVE IN ATTRACTIVE PRODUCTION DEVELOPMENT FLOWS/ RESOURCES ADDITIONS GROWTH PROJECTS RETURNS FCX Consolidated Copper Resources at 12/31/2013 Recoverable Reserves (a) 111 bn lbs Mineralized Material (contained) (b) 115 bn lbs Total Reserves (a) & Minera

  13. Slide 13: Brownfield Development Projects

    Brownfield Development Projects Morenci Mill Expansion Cerro Verde Mill Expansion $1.6 billion $4.6 billion • Construction substantially complete • Detailed engineering & procurement • Commenced operations in May 2014 complete; construction advancing on schedule & approaching 40% complete • Ramp-up

  14. Slide 14: Grasberg BC & DMLZ Underground Mine Development

    Grasberg BC & DMLZ Underground Mine Development History of PT-FI UG Operations • Completed development on access to underground ore bodies • Recognized Global Leader in Underground Mining & Development • Completed 122 km of development in Grasberg BC & 89 km in DMLZ • Initial Block Caving Operations

  15. Slide 15: Indonesian Matters

    Indonesian Matters  Resumed Export Shipments in August 2014  Working Cooperatively with Government Regarding Amended COW − Positive Long-term Partnership − Operations Provide Significant Benefits to Indonesian Economy − All Rights Under COW to Continue Until Agreed Amendment − Negotiations to Take

  16. Slide 16: Strong Execution – Last 12-month Oil & Gas Results

    Strong Execution – Last 12-month Oil & Gas Results  Strong Operating/Financial Performance in Brent and HLS Pricing per Bbl 12-month Period Ended September 30, 2014 $150  LTM Adjusted EBITDA of $3.1 Billion $125 $100  Sales: 61.3 MMBOE (77% Oil/Liquids) $75 − FM O&G Oil Realization: $97/bbl $50 (

  17. Slide 17: Oil & Natural Gas Hedging Positions

    Oil & Natural Gas Hedging Positions Oil Hedges Indexed to Brent 4Q 2014 – 100% Hedged 2015 Puts Unhedged 75 MBbls/d 30 MBbls/d 21% $90 floor $95 floor $70 limit $75 limit $5.74 ADP $6.09 ADP Puts 5 MBbls/d $100 floor 84 MBbls/d $80 limit $90 floor $7.11 ADP $70 limit $6.89 ADP 83 MBbls/d* 107 MBbls/

  18. Slide 18: Reserves & Resource Potential

    Reserves & Resource Potential Year-end 2013 Proved Reserves & Net Unrisked Resource Potential 4.4 3.3 18.1 5.1 0.4 0.2 0.2 N/A 0.3 N/A Reserves Resource Reserves Resource Reserves Resource Reserves Resource Reserves Resource California Deepwater GOM Inboard Lower Tertiary Haynesville/Other Internati

  19. Slide 19: Strategic Position in Deepwater Gulf of Mexico

    Strategic Position in Deepwater Gulf of Mexico Major Exploration/ Operating/ Development Exploitation Producing Assets Projects Opportunities  Significant Current Oil  Financially Attractive  Strategic Acreage Near Production with Strong Development Activities Existing Facilities with Cash Margin

  20. Slide 20: Inboard Lower Tertiary/Cretaceous Activities

    Inboard Lower Tertiary/ Cretaceous Activities Industry Leader in Emerging New ILT Trend Cretaceous Tuscaloosa Trend Cumulative Production 3.1 TCF, 121 mmbc Tuscaloosa Trend LOUISIANA Farthest Gate West Lineham Creek Industry Leader in Emerging New Inboard Lower Highlander Davy Jones Tertiary/Cretace

  21. Slide 21: Sales Profile

    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 3 2 2.5 6 1 1.2 1.2 1.3 5.5 0 2013 2014e 2015e 2016e Note: Consolidated gold sales include 123k ozs in 2013, 120k ozs 4 4.4 in 2014e, 125k ozs in 2015e and 230k ozs in 2016e for noncontrolling interest. 4.1 3.9 Molybdenum Sales (milli

  22. Slide 22: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices Average EBITDA ($1,200 Gold, $10 Molybdenum & $100 Oil) (US$ billions) $20 $15 $10 $5 2015e/2016e Average $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,200 Gold, $10 Molybdenum & $100 Oil) $15

  23. Slide 23: Capital Expenditures

    Capital Expenditures (1) (US$ billions) $8 $7.5 $7.5 $6.5 $6 Oil & Gas 3.5 3.4 4.0 $4 Major Projects TOTAL 2.7 (2) $2 3.0 MINING 4.0 1.4 4.1 2.5 Other Mining 1.3 1.1 1.1 $0 2014e 2015e 2016e (1) Capital expenditure estimates include projects in progress. Project spending will continue to be reviewed

  24. Slide 24: Summary

    Summary A Strong & Focused Organization Maximize Total Shareholder Returns Strong Management of the Base  Operational Excellence  Achieve Production Targets  Effective Cost and Capital Management  Manage HS&E and Other Inherent Risks Return Driven Growth  Prioritize Highest Value Opportunities

  25. Slide 25: Appendix

    = FREEPORT-MicMoRAN STRENGTH IN RESOURCES Appendix

  26. Slide 26: Oil & Gas Portfolio Optimization

    Oil & Gas Portfolio Optimization  Sold Eagle Ford Shale Interests Net Resource Potential Comparison for $3.1 bn in June 2014 (MMBOE)  Reinvested $1.4 bn in Deepwater GOM ~1,300 Interests, Including: - Lucius Oil Development (5.1% WI) - Heidelberg Oil Development (12.5% WI) - Vito Oil Discovery (18

  27. Slide 27: Deepwater Gulf of Mexico Focus Areas

    Deepwater Gulf of Mexico Focus Areas Development/Exploration Project Inventory Net Unrisked Louisiana Resource Potential Asset Area (Billion BOE) Green Canyon Area 1.6 Marlin/Horn Mountain Area 0.6 Dorado Marlin Vito Area 1.0 Keathley Canyon Area 1.2 King Viosca Knoll Deepwater GOM Total 4.4 Ram Pow

  28. Slide 28: Lucius & Heidelberg – Deepwater GOM Development Projects

    Lucius & Heidelberg – Deepwater GOM Development Projects  Commissioning Work is in Progress  First Production Expected in 4Q 2014  300+ MMBOE Gross Resource Potential  Processing Capacity − 80,000 BOPD − 450,000 MCFD  FM O&G 25.1% WI Lucius  Water Depth: 7,200’  Hull Fabrication Complete  To

  29. Slide 29: Sensitivities (US$ millions)

    Sensitivities (US$ millions) 2015e/2016e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $480 $335 Molybdenum: +/- $1.00/lb $90 $70 Gold: +/- $50/ounce $90 $50 Oil Sales: +/- $5/bbl(1) $225 $180 Oil Sales Net of Diesel Costs:(1,2) +/- $5/bbl $180 $145 Natural Gas: +/- $0.50/Mcf $55 $45 Curren

  30. Slide 30: 2014e Operating Estimates

    2014e Operating Estimates 2014e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.85 $1.61 $2.72 $1.55 $1.91 By-product Credits (0.24) (0.22) (2.07) (0.46) (0.59) Treatment Charges 0.12 0.17 0.2

  31. Slide 31: 2H 2014e Oil & Gas Operating Estimates

    2H 2014e Oil & Gas Operating Estimates Madden & Operating Cost: $1.85/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $36/bbl Pricing: Brent Based Gulf of Mexico Operating Cost: $18/bbl Pricing: HLS/NYMEX 2H 2014e Oil & Gas Sales by Region California Haynesville/ GOM Madden/Other 56 39 13

  32. Slide 32: Reconciliation of Cash Margin (Non-GAAP) to Gross Profit (GAAP)

    Reconciliation of Cash Margin (Non-GAAP) to Gross Profit (GAAP) The following table reconciles cash margin, a non-GAAP measure, to gross profit (GAAP) for the trailing twelve months ended September 30, 2014. Management believes this presentation may be useful to investors. FM O&G management uses thi

  33. Slide 33: Reconciliation of Cash Margin (Non-GAAP) to Gross Profit (GAAP)

    Reconciliation of Cash Margin (Non-GAAP) to Gross Profit (GAAP) The following table reconciles cash margin, a non-GAAP measure, to gross profit (GAAP) for the nine months ended September 30, 2014. Management believes this presentation may be useful to investors. FM O&G management uses this informati

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